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Why America's Aging Population Can Save Medicare

In the run-up to the New York fall fashion shows at Lincoln Center, Carmen Dell’Orefice, age 81, adorns promotional banners and blogs. At the 92nd Street Y on Manhattan’s Upper East Side, Mayor Ed Koch, 87, and former Fed Chairman Paul Volker, 84, lead a talk to “share relevant information and wisdom” for NYC’s unofficial intelligentsia. And in The Villages, Florida, the self-proclaimed “friendliest retirement hometown,” not to mention one of the largest retirement communities in the nation, Paul Ryan enters stage right with his vibrant mother, 78, to declare how he and Governor Romney plan to “save Medicare."

This unlikely collision of Fashion Week, the 92nd Street Y, and Sunshine State retirement living speaks of a larger cultural shift that is upon us, reflecting a transformation of huge proportion: In our 21st century, we’re witnessing a new “old.” It's a new reality of healthy, active, and productive people, not to mention beautiful, smart, and politically savvy people, into their 60s, 70s, and 80s.

As with other such social and economic historical changes, this had been emerging for some decades and has now arrived. It’s no wonder that this new kind of aging, and its impact on Medicare, has become a watershed issue of the 2012 presidential campaign.

But for all the political talk and all that's been written, everyone is missing the point. It’s not that the 77 million baby boomers in the U.S. are going to bankrupt Medicare. It’s the opposite. This new, gigantic aging cohort is going to save the social insurance program if we capture the power of larger adult populations in this decade and the decades to come.

Who is old? What is middle age? How do institutions adapt to the new demographic realities? These are vital questions today. Fully embraced, an active, productive aging is creating and will continue to create a culture shift in which “seniors” break out of the traditional roles of need and dependency and become vibrant producers in society. No longer the automatic recipients of government welfare, popular pity, or condescension, these healthy, vital seniors will remain at the heart of social and economic life and spare the precious federal insurance dollars for those really in need. This is not FDR’s or LBJ's aging population and we shouldn’t treat it as such.

This transformation is as culturally liberating as it is economically essential. In the U. S., there will soon be more people over the age of 65 than under 15. We’re not just witnessing a new kind of aging: We’re seeing the emergence of a new kind of society, where older adults outnumber children. From both a social and a financial point of view, how can we look these demographic realities in the eye and not re-think how to provide health care and other essential services to the aging?

When Medicare was created in 1965, only 10 percent of Americans were over 65 and eligible. Today, this number has crept to 13 percent, and by 2030 it will reach 20 percent. The arithmetic is undeniable, no matter an individual's political bent.

An older America need not be an obit for Medicare, however much presidential political polemics may suggest it. If we embrace a progressive, optimistic view of aging, the Medicare “crisis” becomes an opportunity. The cultural change that can save Medicare is the same kind of change that can put the U.S. economy back on track during this rough time. If older adults remain at the heart of social and economic life, the U.S.’s largest population segment will become an American “demographic dividend.”

Economists and demographers often refer to this dividend as the working-aged population that is driving economic growth. For the past couple of decades, much of Asia, for example, is seen to have a demographic dividend because its 18-55 population is far larger than the over-55s. But the culture shift that we observe both in this fall’s Fashion Week and in the current presidential campaign shows that the U.S.’s aging population is its demographic dividend.

Our current political dialogue has the Medicare issue backwards. It’s not just that Medicare needs to change in order to survive in an era of an older society. The idea of aging itself needs to change in order to allow Medicare to survive.

Michael W. Hodin, Ph.D., is Adjunct Senior Fellow at The Council of Foreign Relations and Executive Director of The Global Coalition on Aging.